Instead of thinking about energy overall, it is better to think about high-quality energy, or exergy, according to Skip Laitner, a visiting fellow at ACEEE.

“What most people call energy, for example, is what physicists and engineers are more likely to call exergy, or high-quality energy that is available to do work,” he explains in a blog post. “Energy that is either wasted or useless -- in effect, energy that has no capacity to perform work such as the heat in the atmosphere -- is referred to as anergy.” Add up anergy and exergy and you get total energy. Capture that waste heat, however, and it becomes something useful.

Laitner found that just tracking energy commodities, for instance, accounted for only 80 percent of the exergy necessary to power the U.S. economy in 2010. By measuring and cutting the waste that it takes to complete a task, he argues, there will be greater opportunity for more useful work which can then in turn increase economic activity.

Useful work is divided into three categories: muscle work, mechanical and electrical power, and heat that is delivered to the point of actual use (in homes or businesses).

Using those definitions, Laitner found that exergy efficiency has slowed considerably in recent decades, from a 1.4 percent improvement per year from 1950 to 1980, to a 0.4 percent per year growth from 1980 to 2010. The smaller rate of improvement, Laitner argues, weakens the nation’s larger economic productivity. But, if the opposite were to happen -- if the rate of exergy efficiency increased -- the total exergy needed to power the economy could decline even as work continues to grow.

The reason is that the EIA data tracks only the heating values for commodities we call gallons of oil or gasoline, cubic feet of natural gas, or kilowatt-hours of electricity -- whether for heat and power, or for use as chemical feedstocks as in the production of plastics and petroleum products. Those heating values don’t tell us how much actual work is being done. Because exergy tracks the conversion of high-quality energy into useful work (that is, how much shaft power, delivered lighting, or chemical energy is necessary to transform matter in the goods and services) the Ayres-Warr accounting framework gives us an improved capacity to assess how much productive work is enabled by the use of high-quality energy.

By using the Ayres-Warr approach, Laitner found that not only are rates of converting total energy into useful work stagnant, but that they could constrain economic productivity through 2040.

Laitner acknowledges that energy efficiency, as it is currently defined, is a good way to manage the growth of energy consumption and is a cost-effective means to transition to a lower-carbon economy. But he contends that “energy efficiency -- especially when understood as exergy efficiency -- plays a more critical role within the economic process than is generally understood.”

Essentially, Laitner wants everyone to think bigger. He advocates for a shift from focusing on energy supply to energy productivity, as defined by exergy efficiency improvements. Of course, that would require exergy accounting, which agencies like the U.S. Energy Information Administration currently don’t do. Laitner suggests a national workshop or conference to explore these issues further.

But as for the smarter policy he calls for, which would enable more accurate pricing of exergy efficiency, it will be an uphill battle, to say the least. Energy efficiency, even if it is an imperfect measure, is still a tough sell for homes and businesses despite its obvious benefits in terms of cost and societal value. It is unclear if changing the methodology would dissipate the inertia around energy efficiency, or if it would inspire policymakers to move faster to enable it -- just look at how long Shaheen-Portman has been hanging around.

But Laitner certainly gives economists and energy analysts something to think about. “If we want to develop a resilient and more sustainable economy over the long-term,” he concludes, “then we must agree that energy efficiency -- more properly, exergy efficiency -- matters.”

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Katherine Tweed writes on smart grid, demand response, energy efficiency and home networking for Greentech Media. Her freelance work has appeared in a range of media outlets, from Scientific American and FoxNews to Audubon Magazine and Men’s Health. She has a master’s degree in Science, Health and Environmental Reporting from New York University. Katherine never leaves her electronics in ...

I think it's easy to get wrapped around the axle about energy efficiency and miss the forest for the trees. The first question that always needs to be be asked is what is the energy need? Only then is it possible to know what the most energy efficient method to meet the need is. Be it pumping water, irrigating crops, sanitation, lighting, etc.

There is no one machine, be it a CCGT or whatever, or any other single machine that is perfect for every situation. A gas turbine can't run a chainsaw, a two-stroke engine can't run a car, etc.

My own personal experience is that steam gets left out of a lot of energy planning because there aren't that many people left who know about it - even though 90% of the world's electric comes from steam. It's mostly large, remote power stations. Love to go to old steam antique engine conventions, though.

If only we would start using exergy and anergy, it would starkly reveal the folly of biofuels. Their EROIs are already low enough counting the joules in DDGS as equivalent in value to the joules in diesel fuel. But if the needless creation of entropy involved in converting hydrocarbons to carbohydrates and back to hydrocarbons were properly accounted, their truly unconscionable wastefulness would be revealed. A similar revelation would result when one compared the lifecycle entropy stream of complex hybrid autos to simple diesels, and exquisitely expensive and complex LEED Gold showcase buildings to more cost-effective construction, and erratic wind and solar power requiring 100% backup and spinning reserves compared to cheap and 0.60 thermally efficient CCGT natural gas. A key part of exergy efficiency is using energy of appropriate quality for appropriate purposes and not downgrading or upgrading it wastefully in conversions unless absolutely necessary. Using liquid hydrocarbons as fuel for anything but transportation is a waste. Using petroleum or natural gas to make lower quality alcohols and lipids is nonsensical. Likewise burning solid wood as fuel makes sense, but converting it into methanol or ethanol intended for fuel is thermodynamic foolishness of the first degree.

If we could get people in charge of energy use decisions to think in terms of CO2 cost rather than $ cost or energy cost then that might gain some traction. Both characters in John's scenario might be able to do more. $ cost is so ingrained that perhaps a carbon price is needed for this focus - or can we make more progress just by educating people to the true cost of their energy use decisions?

Laiter’s view of energy efficiency is interesting and possibly somewhat abstract compared to current thermodynamic-economic definitions. Most economies have become more efficient over time in the development of GDP (or unit GDP per total primary energy Btu consumed) due to lower financial cost per GDP produced-consumed. The level of efficiency is based on the cost of energy, the cost of the technology to convert the energy into useful work and products, and the income or purchasing power of the average consumer. Changing this current free market system model to some form of ‘exergy’ based efficiency or some form of artificial pricing of exergy efficiency obviously depends on how one defines useful or socially valuable work.

Is a volume of petroleum energy consumed to produce food of more value or exergy efficient than the same volume of petroleum energy consumed for discretionary leisure activities such as a vacation, trip to the theater/restaurant or visiting friends/relatives?; Which consumer's behavior has greater exergy efficiency? A richer homeowner that pays $1,000’s to insulate their home and operates their thermostat at 70 degree F during the freezing cold of winter or a less rich renter who lives in a less thermally efficient apartment and operates their thermostat at 60 degree F and wears a sweater indoors during the winter? Both natural gas energy consumers may have similar heating bills, but which one provides the greater social value or has the greatest exergy efficiency?

The reduction in useful work over the years may have a lot to do with the US putting its focus on commodities like oil and gas instead of value added manufacturing. Oil and gas could care less about uselful work once its product is sold to the market. Actually efficiency and reduction in use - which would be the basis of useful work - is an anathema to fossil fuel producers (excluding its own operations of course).

“Reduction in useful work”? Let’s talk statistical facts. Since 1990 the U.S. GDP (based on BEA data) has increased from $9.0 Trillion up to $15.5 Trillion in 2012 (2009 dollar basis). Total U.S. fossil fuels consumption was 72.33 quadrillion Btu of the total primary energy of 84.49 quadrillion Btu in 1990 (or fossil fuels made up 86% of total primary energy consumption), and total fossil fuels made up 78.06 quadrillion Btu of the total primary energy of 95.10 Q Btu in 2012 (fossil fuels = 82% of total). Fossil fuels declined by about 4% of total U.S. primary energy consumption 1990-2012.

These data show that U.S. fossil fuels consumption per $Million GDP declined from 8.0 Billion Btu to 5.0 Billion Btu 1990-2012. This represents a 38% reduction in total fossil fuels consumption per unit GDP while the total U.S. GPD increased by 72% 1990-2012. Fossil fuels producers are partially responsible for this improved U.S. energy efficiency per unit GDP by keeping fossil fuels costs low compared to most developed and developing countries. The vast majority of the GDP growth is of course due to other innovations and growth of other industrial sources that use primarily fossil fuels currently to drive or perform useful work within the U.S. (and nearly all other world) economies.